Expecting better: Labour's renewed relationship with business
In March, we launched a new joint essay series with Social Market Foundation (SMF) think-tank entitled ‘Banking on Building Back Better - How can a stakeholder economy help rebuild the UK after COVID-19?’
The Coronavirus crisis has affected us all, although not equally. Experiences of the last year depend considerably on where in the country you live, your ethnicity, gender, the nature of your job and the type of business in which you work.
Some of this is unavoidable. COVID-19 physically affects some much more severely than others. The way in which the virus spreads means that someone who works in a restaurant has seen their workplace close altogether while a graphic designer may have been able to switch to working from home.
Yet many aspects of this crisis were eminently avoidable. There is nothing inherent about COVID-19 that means people living in the North should have been more likely to have their working hours reduced, to have lost their jobs entirely – indeed, to have lost their lives – than those living elsewhere, when everything else is held equal. It is not inevitable that an estimated seven in ten people who develop symptoms are not self-isolating because their income, the nature of their work and their socioeconomic status all act as barriers to doing the right thing.
The fact is that we went into this crisis as one of the most unequal countries in Europe and with too many people living on a knife-edge. At the start of the pandemic a quarter of all families in the UK had less than £100 in savings to fall back on. That lack of resilience at the individual household level spoke of a broader lack of resilience in the country as a whole. As a result, the UK has suffered the worst recession of any major economy.
The fact is that we went into this crisis as one of the most unequal countries in Europe and with too many people living on a knife-edge.
These points matter because it is only through an honest assessment of the weaknesses in our pre-COVID economy that we will be able to lay the foundations for a sustainable recovery. Doing so will require a responsible approach from government and businesses alike, working in partnership.
We have seen that partnership working at its best during the crisis. Government, businesses and trade unions came together to develop the furlough scheme that has helped keep people in jobs during national lockdowns – although subsequent government attempts to unwind the scheme too soon have at times risked undoing that good work.
We’ve seen businesses rise to the challenge of the times in a spirit of civic duty. I saw that for myself last year at Airbus’s advanced manufacturing centre in north Wales, where production lines were switched in a matter of hours to start producing the ventilators we so desperately needed. In my own constituency, AstraZeneca has done groundbreaking work with the University of Oxford to develop a vaccine that will now be rolled out at cost.
We should capture and retain that spirit of cooperation as we plan for the recovery. Because we should also be honest that it has not always been there in recent years.
Businesses have not been able to expect a responsible approach from government. Over recent years, political brinkmanship – up to and including the threat of breaking international law – has jeopardised the UK’s reputation as a place to do business. Short-termism has characterised the government’s handling of the COVID crisis, with business support packages being chopped and changed – often at the last minute – with no thought to the long-term certainty that firms need to plan.
At the same time, not every business has taken its own responsibilities seriously. From high-profile collapses as a result of severe failures of governance, to gaping holes left in pension schemes, to shocking revelations about conditions in supply chain factories, to the appalling use of ‘fire and rehire’ tactics; poor corporate behaviour has also been too often in evidence in recent years.
It feels as if businesses have come to expect less and less of government, and government has come to expect less and less of business in return. It does not have to be like this. Under new leadership, Labour is committed to rebuilding that partnership – to expecting better of one another.
Labour will always back British business, laying the long-term foundations and providing the clarity and stability that firms need to succeed and to grow. I know personally how good businesses, like the small firm my father ran, are more than just about conducting transactions – they’re the heart of our communities and our high streets.
It feels as if businesses have come to expect less and less of government, and government has come to expect less and less of business in return. It does not have to be like this.
Labour’s ambition for the UK to be the best place to grow up in and the best place to grow old in cannot be achieved without a flourishing private sector. That’s why under Labour, businesses can expect a government that thinks long-term, that lays the foundations on which innovative firms can compete and flourish.
That means well-targeted investment in infrastructure, like Labour’s call for government to accelerate £30 billion of capital spending in the next 18 months to stimulate the creation of 400,000 jobs. It means investment in skills and training so that people are ready to take up those new jobs. It also means enabling a clear, dependable operating environment: establishing a stable regulatory context, tackling barriers to coordination, and setting out open and interoperable standards.
Yet this has to be a two-way street. Labour will also expect more of business in return. That means broadening the lens of what good corporate performance looks like, so that as well as returns to shareholders, more businesses are thinking about the contribution they make to our transition to net zero, the responsibility they have to their employees – working with trade unions, investing in skills and development – and the role they play in the local community.
It is time politicians and businesses start expecting more of one another. The last ten years have too often shown what happens when we do not have those high expectations. The last ten months have shown inspirational examples of what can happen when we do.
To read the full 'Banking on building back better' essay series click here.